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For Better or Worse?

Industry leaders say the final CAFE standards will mean a $65 billion-plus loss for highway and transit improvements.

By Tina Grady Barbaccia, News and Digital Editor

The Obama Administration’s July 29 proposal to increase fuel efficiency standards for cars and light trucks to an average 54.5 miles per gallon (mpg) between 2017 and 2025 would result in the loss of more than $65 billion in federal funding for state and local highway, bridge, and transit improvements, according to an analysis by the American Road & Transportation Builders Association (ARTBA). The original Corporate Average Fuel Economy (CAFE) standard, set in 1975, demanded a 40-percent increase in fuel efficiency.

The impact on the nation’s transportation improvement program, ARTBA President Pete Ruane said, would be like eliminating all federal highway funding for nearly two years.

“Like everyone else, we are supportive of efforts to reduce carbon emissions and improve fuel economy,” Ruane said in a written statement. “However, from a public policy perspective, this is a classic case of the left hand not knowing what the right hand is doing. It’s irresponsible to advance such proposals without acknowledging and attempting to mitigate the adverse effect they would have on other areas of federal responsibility like making infrastructure improvements that improve safety, reduce traffic congestion, create jobs, and help grow the economy.”

Per gallon federal gasoline and diesel taxes collected at the pump are deposited into the federal Highway Trust Fund (HTF). By law, these excises are the primary revenue source for financing road, bridge, and transit projects. The less motor fuel used by drivers, the less revenue generated for improvements financed through the HTF.

The analysis, conducted by Dr. William Buechner, a Harvard-trained economist and ARTBA vice president of economics & research, assumes the increase in fuel efficiency standards between now and 2016 will occur as required (in 2010, the Obama Administration put in place an increase from an average 28.3 to 34.1 mpg by 2016). It also assumes the mpg requirement will be phased in at 5 percent per year from 2017 through 2025 as proposed.

The baseline for calculating revenue losses is the U.S. Treasury’s February 2009 projections of HTF revenues. As new cars and light trucks are purchased in the future and old ones retired, average fuel economy will improve, reducing the 2009 forecast of gasoline sales and HTF revenues.

Buechner says the HTF has already taken a revenue hit with the standards put in place in 2010. From fiscal years 2010-2016, he estimates that action will cost the HTF about $9 billion. This means, if the new standards are enacted, the total loss of revenue for transportation improvements through 2025 is projected at $75 billion.

Ruane said the nearly two-year overdue federal highway and transit program reauthorization bill “provides a ripe opportunity for Congress and the President to identify all possible options to generate the revenues necessary to maintain and improve the system.”

In a prepared statement, President Obama said “an agreement such as this would have been considered impossible. This announcement…represents not only a change in policy in Washington, but the harbinger of a change in the way business is done in Washington. As a result of this agreement, we will save 1.8 billion barrels of oil over the lifetime of the vehicles sold in the next five years. And at a time of historic crisis in our auto industry, this rule provides the clear certainty that will allow these companies to plan for a future in which they are building the cars of the 21st century.”

In a July 29 letter from Volvo Car Corp. to Secretary Ray LaHood and EPA Administrator Lisa Jackson, Doug Speck, senior vice president for marketing, sales, and customer service said, “Volvo Car Corp.…commits to working with the EPA and NHTSA, the states, and other stakeholders to help our country address the need to reduce dependence on oil, to save consumers money, and to ensure regulatory predictability and certainty by developing this kind of strong, coordinated National Program [sic].” For a downloadble PDF of the letter, go to http://www.epa.gov/otaq/climate/letters/volvo-commitment-ltr.pdf.

For a commentary analysis on how the standards may be “ambitious, but not out of the range of feasibility,” go to http://www.1.usa.gov/n69isg.

Caterpillar Settles alleged Clear Air Act violations for $2.55 million

Peoria, Ill.-based heavy equipment manufacturer Caterpillar agreed to pay a $2.55 million penalty — $2.04 million to the United States and $510,000 to the state of California — on July 28 as part of a settlement with the U.S. Environmental Protection Agency (EPA) and the U.S. Department of Justice (DOJ) for alleged Clean Air Act violations. For a downloadable PDF of the United States vs. Caterpillar, go to http://www.1.usa.gov/USvsCat.

Cat allegedly shipped more than 590,000 highway and non-road diesel engines without correct emissions controls, according to the EPA. Caterpillar also allegedly failed to comply with emission control reporting and engine-labeling requirements.

The settlement requires Cat to recall the known defective engines, install the correct ATDs — devices that control engine exhaust emissions once the emissions have exited the engine and entered the exhaust system — and reprogram the fuel injector and fuel map settings. The recall will continue until all engines with incorrect catalysts, fuel injectors, or fuel map settings have been addressed or until Dec. 31, 2011, whichever is earlier, according to the EPA.

Caterpillar also will mitigate excess emissions through permanent retirement of banked emission credits, according to the settlement. Within 30 days of entry of the Consent Decree, Caterpillar agrees to retire credits equivalent to the lifetime excess emissions from the 925 engines that did not receive the correct ATD or that were programmed with incorrect fuel injector or fuel map settings.

“As the decree indicates, Caterpillar denies any wrongdoing, but does agree that the decree represents a good faith effort between the parties to resolve their differences and avoid potentially lengthy litigation,” Young says. “Caterpillar is committed to following the terms of the decree.”

The EPA complaint points out that about 925 of the 590,282 engines shipped to original equipment manufacturers (OEMs) with separately shipped aftertreatment and/or fuel programming software actually entered use without correct assembly by the final product OEMs, Young notes.

And the Award Goes to AggMan

The American Society of Business Publication Editors (ASBPE) has honored Randall-Reilly Publishing Co., parent company of Aggregates Manager magazine, with three national editorial awards, 12 regional editorial awards, and three design awards in the organization’s Azbee Awards of Excellence.

Aggregates Manger was honored for its two awards — one gold and one silver award — in the Midwest-South region at an awards banquet on July 28 in Chicago. ASBPE presented its national awards during an awards banquet on Aug. 4 during the organization’s national conference in Chicago.

Last year, ASBPE presented Aggregates Manager with two awards, including a silver and a bronze regional award, honoring both editorial and design work. From 2005 to date, ASBPE has awarded Aggregates Manager a combined 14 regional and national awards.

The Azbee Awards of Excellence is a peer-judged contest that honors the top b2b publications in various categories.

“I’ve always believed Aggregates Manager editors, designers, and contributors are among the best in the business, but it’s particularly gratifying to receive consistent recognition of Aggregates Manager’s editorial quality from our peers,” says Therese Dunphy, editor-in-chief of Aggregates Manager, of the magazine consistently being recognized by ASBPE and other organizations.

Adds Joe Donald, publisher of Aggregates Manager: “We are proud and honored to be recognized by ASBPE. We look forward to continuing to work hard to serve our industries.”

AggMan Awards At a Glance

The following is a list of the 2010 Azbee Awards of Excellence won by Aggregates Manager.